Mergers & Acquisitions Attorney in Red Rock

What Is the Difference Between a Merger & Acquisition?

A merger and an acquisition are both methods by which companies consolidate with each other, but they have distinct differences. In a merger, two roughly equal companies come together to combine and form a new entity. Both parties mutually agree to merge their operations, usually in an effort to scale up, diversify their businesses, or enter new markets. The original companies cease to exist and a new company forms from their consolidation.

On the other hand, an acquisition is when one company—the acquirer—purchases another company, often referred to as the target. The target company may be absorbed into the acquirer’s operations or may continue to operate as a subsidiary of the acquirer. In an acquisition, the acquiring company effectively takes control of the target company, and the target company ceases to exist as an independent entity.

The key difference lies in the power dynamics—an acquisition involves one company taking over another, while a merger is often a mutual agreement between equals. However, both methods are incredibly complex and come with a myriad of necessary legalities that all need to be executed with precision to ensure a smooth process.

If your business is considering a merger or acquisition, contact our experienced Red Rock M&A attorneys at The J.D. Wilson Law Firm. We can walk you through every stage of the process, so you can focus on your business’s big-picture goals. Call us at (512) 355-1161 or reach out online today to schedule a consultation.

What Are the Legal Matters Associated with Mergers & Acquisitions?

While the specifics of a merger or acquisition will vary based on jurisdiction and the nature of the businesses involved, there are a variety of legal procedures commonly associated with these transactions. Our knowledgeable attorneys can support you with:

• Due Diligence: This involves a comprehensive appraisal of the business to establish its assets and liabilities and evaluate its commercial potential.
• Merger or Acquisition Agreement: This is the legal contract that outlines the terms and conditions of the transaction, including the purchase price and payment method. We can assist with the drafting, review, and negotiations that surround this agreement.
• Regulatory Approvals: Many mergers and acquisitions require approval from regulatory bodies such as the Federal Trade Commission or Department of Justice.
• Shareholder Approval: If either of the companies involved is publicly traded, the transaction will typically need approval from a majority of the shareholders.
• Employment Law Issues: Mergers and acquisitions can have significant implications a company’s employees, including potential layoffs, changes in management, and alterations to benefits packages.
• Liabilities and Insurance Policy Review: The acquiring company may inherit the target company’s debts and other liabilities, so these should be thoroughly investigated. Additionally, if policies change, it’s important to ensure that new wording still protects your business.
• Confidentiality Agreements: These protect sensitive information that is shared during the negotiation process.
• Non-Compete Clauses: These prevent the seller from starting a new, competing business for a certain period after the sale.